In his first conference speech as shadow chancellor, Mr Balls told ­delegates in Liverpool some commentators were right to say that “we made mistakes in government”.

We should have adopted tougher controls on migration from Eastern Europe

Shadow Chancellor Ed Balls

He added: “We must admit them and show we’ve learned from them.” Labour had blundered over a 75p annual rise in the state pension and the scrapping of the 10p income tax rate, he said.

“We should have adopted tougher controls on migration from Eastern Europe. And yes – we didn’t regulate the banks toughly enough.”

But he added: “Don’t let anyone tell you Labour in government was profligate with public money, when we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan.”

He also called for last January’s 2.5 per cent VAT hike to be scrapped, a 12-month 5 per cent VAT rate on DIY products and a one-year national insurance holiday for small firms taking on extra staff.

But he accepted that a future Labour government would be unable to reverse many Tory spending cuts. “Call it Plan A-plus. Call it Plan B. Call it Plan C. I don’t care want they call it, Britain just needs a plan that works,” he said.

Economic Secretary to the Treasury Justine Greening said Mr Balls’ plan would cost £21billion a year.

She said: “This speech failed the credibility test. Everyone can see Ed Balls is dangerously addicted to debt.

“He doesn’t have a single positive idea for reducing the massive budget deficit he created and he can’t even admit that Labour spent too much in Government.”